RICHMOND — A prominent political donor gave $70,000 to a corporation owned by Virginia Gov. Robert F. McDonnell and his sister last year, and the governor did not disclose the money as a gift or loan, according to people with knowledge of the payments.

The donor, wealthy businessman Jonnie R. Williams Sr., also gave a previously unknown $50,000 check to the governor’s wife, Maureen, in 2011, the people said.

The money to the corporation and Maureen McDonnell brings to $145,000 the amount Williams gave to assist the McDonnell family in 2011 and 2012 — funds that are now at the center of federal and state investigations.

Williams, the chief executive of dietary supplement manufacturer Star Scientific Inc., also provided a $10,000 check in December as a present to McDonnell’s eldest daughter, Jeanine, intended to help defray costs at her May 2013 wedding, the people said.

Virginia’s first family already is under intense scrutiny for accepting $15,000 from the same chief executive to pay for the catering at the June 2011 wedding of Cailin McDonnell at the Executive Mansion.

All the payments came as McDonnell and his wife took steps to promote the donor’s company and its products.

The payments to the corporation, confirmed by people familiar with the transactions, offer the first public example of money provided by Williams that would directly benefit the governor and not just his family.

The money went from a trust, controlled by Williams, to MoBo Real Estate Partners, a limited-liability corporation formed in 2005 by McDonnell and his sister, the sources said.

McDonnell viewed the payments to MoBo and to his wife as loans and not gifts, according to three people familiar with the transactions. State law requires elected officials to disclose their personal loans but not loans made to their corporate interests.

Tucker Martin, a spokesman for the governor, declined to comment on the payments other than to say that McDonnell has been diligent in filling out legally mandated disclosures.

“The rules that I’m following have been rules that have been in place for decades,” McDonnell said Tuesday on a Norfolk radio show. “These have been the disclosure rules of Virginia. I’m following those. To, after the fact, impose some new requirements on an official when you haven’t kept record of other gifts given to family members or things like that obviously wouldn’t be fair.”

State law requires the disclosure of any gift valued at more than $50, but gifts to family members are exempt.

Jerry Kilgore, an attorney for Williams, declined to comment on the payments. A spokesman for the U.S. attorney investigating the payments also declined to comment.

On state-mandated disclosure forms, McDonnell indicated that a member of his immediate family owed money to an unnamed individual creditor in 2011 and 2012. In one year, he described the creditor as someone in “medical services.” In the other year, the governor said the creditor was in “health care.” Star Scientific makes nutritional supplements.

The form did not specify the exact amount owed; the governor checked a box saying it was between $10,001 and $50,000.

It’s important to note that, at least on the surface, McDonnell seems to have fully complied with the law for the most part. There have been one or two personal gifts, such as the Rolex, that apparently went unreported but he has since amended the appropriate disclosure forms to include them. The problem comes with the very generous gifts, or whatever you wish to call them, given to family members. This ranges from shopping sprees that his wife too at someone else’s expense to the tens of thousands of dollars that the head of Star Scientific poured into the lavish wedding thrown for his daughter at the Governor’s Mansion several years ago, to these latest payments to the family LLC. The reason there’s an investigation is because of the implication that these gifts “to family members,” were really disguised gifts to McDonnell himself that were structured in such a way as to avoid having to report them and thus raise questions about why a sitting Governor was receiving so much in gifts from one or two people. This is why there are investigations at both the state and federal level.

Harvard’s Lawrence Lessig gets at this with his idea of the “gift economy” in his book, Republic, Lost. Lessig defines a “gift economy” like this:

A gift economy is a series of exchanges between two or more souls who never pretend to equate one exchange to another, but who also don’t pretend that reciprocating is unimportant—an economy in the sense that it marks repeated interactions over time, but a gift economy in the sense that it doesn’t liquidate the relationships in terms of cash. Indeed, relationships, not cash, are the currency within these economies.

While in a quid pro quo situation, “the guilty government official must intend to pay for the contribution made,” a “gift economy” is much more subtle. And prevalent. Here’s an obvious, nonpolitical illustration. Lessig again:

I give you a birthday present. It is a good present not so much because it is expensive, but because it expresses well my understanding of you. In that gift, I expect something in return. I would be insulted if on my birthday, you gave me a cash voucher equivalent to the value of the gift I gave you, or even two times the amount I gave you.

As Lessig writes, the gift economy can lead to dependency corruption, where even though there is no obvious ill will, dependency on a donor can lead to the deterioration of objectivity when it comes to examining the interests that that donor represents.

The McDonnell situation doesn’t necessarily fit this gift-economy mold perfectly. As Lessig pictures it, the political gift economy is largely a product of campaign fundraising. With McDonnell, in some cases, direct cash was given by Williams. But with “gifts” like the Rolex, the food catering, and the Final Four airfare, some of this is at play.

Is there proof that Williams, in giving those gifts, demanded reciprication for his company? No. At least not yet. But that doesn’t mean that McDonnell and his family weren’t inclined to look at Williams and Star Scientific more favorably because of the financial assistance they were given.

Even if McDonnell manages to get through this mess without criminal charges being filed, it seems clear that his political career is finished, some thing that even some of Virginia’s most conservative political bloggers — see here and here — are coming to recognize. It’s quite a fall from grace. McDonnell’s name had once been mentioned as a potential future candidate for President. Last year, he was on pretty much everyone’s short list as a potential running mate for Mitt Romney. Now, Virginia Republicans are likely relieved that Virginia’s Constitution bars him from succeeding himself. At the same time, though, there’s still a possibility that this whole story could have an impact in a Virginia Governor’s race that remains very close:

The question now becomes whether McDonnell’s fall from grace hurts gubernatorial nominee Ken Cuccinelli, who Democrats point out also has close ties to Jonnie Williams (including accepting gifts from him). The Cuccinelli campaign responds that Cucinelli’s AG office initiated this investigation, and they don’t believe McAuliffe will be a credible messenger to attack them on this issue. But it’s hard to see how this doesn’t hurt Cuccinelli, because he needs to court moderates and the GOP business community, and right now McDonnell looks to be toxic to help him with those groups.

Losing McDonnell as a surrogate would hurt Cuccinelli not just with business groups, but with the suburban voters in Northern Virginia and Hampton Roads that McDonnell was successfully win just four years ago notwithstanding President Obama’s ability to ride that vote to victory in the state just a year earlier. Virginia’s other statewide elected Republican, Lt. Governor Bill Bolling, would potentially be helpful with those voters, but given the bad blood between him and Cuccinelli that still lingers from when they were rivals for the 2013 nomination, it seems unlikely that we’ll see Bolling life a single finger to help. Will that make a difference in November? It’s hard to say at this early date, but given how close this race is it seems as though Cuccinelli could use all the help he can get. Moreover, if the story gets any worse, then the attention that gets paid to it is likely to hurt Virginia Republicans as a whole, and that obviously won’t help Cuccinelli’s campaign.

Rumors have been circulating for a couple weeks now about a resignation by McDonnell, which would make Bolling the Governor, at least until the end of McDonnell’s term. According to some of these rumors, this resignation would be part of some kind of a plea deal, however these have only appeared to be rumors so far. Two legislators have called for McDonnell to step aside, but they’re both Democrats and those calls won’t become real unless and until Republicans start joining in the call. Whatever happens, though, whether McDonnell resigns or manages to hang on until his term ends in January, this is, as I said the end of his political career, and it seems to be happening for reasons that make no sense whatsoever.

About Doug MataconisDoug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway.
Follow Doug on Twitter | Facebook

Comments

I wonder if one counted the number of stories about Gov. McDonnell’s gifts that have appeared in the Washington Post how it would compare to the number of stories about the Maryland Prison Scandal where drug members were running their gang from inside the prison and several of the female guards were impregnanted by inmates.

Anyone who says that the internet keeps the big media outlets from setting the agenda is a fool. When the MSM decides to destroy someone on the right, they can easily do it.

The odd thing about this entire story, though, is that there doesn’t seem to be and quid pro quo involved in all of this, or that McDonnell did anything to influence state policy to help the people who gave these gifts

Uh, what?

You mean the company using the Governor’s Mansion to promote the product isn’t quid pro quo?

You mean Governor’s wife using state resources to go to events to promote the product isn’t quid pro quo?

You mean the company using a picture of the Governor posing with the product to promote it isn’t quid pro quo?

You mean the Governor’s office or his wife’s office telling the Secretary of Health to take meetings with the company isn’t quid pro quo?

Whatever happens, though, whether McDonnell resigns or manages to hang on until his term ends in January, this is, as I said the end of his political career, and it seems to be happening for reasons that make no sense whatsoever

There are 145,000 reasons, I think, why he did this.
I think Doug is frustrated because one of the moderate Republicans that he voted for and supported and would have supported for a run for higher office has turned out to have feet of clay.

The reason there’s an investigation is because of the implication that these gifts “to family members,” were really disguised gifts to McDonnell himself that were structured in such a way as to avoid having to report them and thus raise questions about why a sitting Governor was receiving so much in gifts from one or two people. This is why there are investigations at both the state and federal level

.

Since all of the gifts I know about have so far all come from Mr. Williams, unless you can link to knowledge of some other gift giver, I’d say that right there is why there are state and federal investigations.

If one Goggles “Tavon White” “Martin O’Malley” Site:washingtonpost.com, one will get 33 hits. If one Goggles Bob McDonnell Rolex site:washingtonpost.com one will get 58 hits. What is interesting is that Bob McDonnell makes the front page while drug gangs running prisons always seems to make the Maryland section of the Washington Post.

So, it looks like the Washington Post considers the outgoing Governor of Virginia, who has been fairly successful from a policy/governance POV to be twice as significant as Martin O’Malley who is being mentioned as a possible Vice-presidential having two major prison scandal during his watch. The Maryland Prison Scandal stayed on the radar for a couple of days but the wedding of Bob McDonnell;s daughter has been on the radar for weeks. I guess since the Maryland prison scandal does not support the meme that Democrats are great at running the government, the scandal story must be quickly forgotten.

I wonder if the Washington Post would have limited itself to 33 stories is there had been a major prison scandal in Virginia. Somehow I doubt it. Weddings and Rolex Watches are just so much more important that drug gangs taking virtual control of state prisons depending on the political parties involved. I wonder if Martin o’Malley had accepted a Rolex Watch if the Washington Post would have cared.

@superdestroyer: Are you suggesting that Martin O’Malley is getting a cut of the profits from those drug dealers that run the Baltimore City prison? There’s quite a difference between incompetence and corruption.

I am suggesting that the national media decided to ignore the story about the Maryland Prison scandal because it made Democrats look bad, it could not be used to make blacks look like victims, and it would hurt the political future of Martin O’Malley

The Maryland Prison Scandal and the media reporting of it is a good example of what happens in a one party state. The media has investment itself with a party and a set of politicians and will ignore anything that changes the narrative.

The Washington Post probably had more stories about what Bob McDonnell wrote while in graduate school/law school that it ever wrote about any single issue in Maryland. The Washington Post editors seem to have some irrational hatred of Bob McDonnell and will launch a two minute hate against him whenever given the chance.

@superdestroyer: Obviously whatever instincts the editors at the Washington Post had about McDonnel were correct and they were right to pursue them.

I would venture to say that a sitting governor accepting hoardes of cash is a more important story than a poorly run city prison. You are still equating incompetence with scandal and corruption. If you have evidence of corruption by Gov. O’Malley you should post that.

Don’t you just love the family families, fiscal responsibility and transparency party? I swear those people would look into the eyes of God and lie straight to his face! That’s how brazen they are. Lying for them comes so naturally. Hope the voters where all these Republicans are in charge are pleased with their voting skills!!! As they say, be careful what you ask for. In many states around the country they voted for a bunch of vipers and boy did they get them!!